He warned their future funding, including being allowed to charge higher tuition fees, would depend on a willingness to "progress swiftly to merger and reconfiguration".

Higher Education Wales said policy was "well understood".

But mergers were condemned by the students' union.

Mr Andrews told an audience in Carmarthen the higher education sector's failure to respond to reconfigure and collaborate as the government intended was costing it money.

Quoting the King James Bible, he reminded institutions: 'Whatsoever a man soweth, that shall he also reap'

Mr Andrews said the government supported the Higher Education Funding Council for Wales' (HEFCW's) corporate strategy.

There will be fewer higher education institutions in Wales by 2013 and fewer vice-chancellors.Leighton Andrews, Education Minister

He said: "There will be fewer higher education institutions in Wales by 2013 and fewer vice-chancellors. That does not mean fewer students or fewer campuses.

"The higher education institutions that remain will have critical mass and will be able to drive forward our agenda.

"Access to the new fees regime will depend on the willingness of university managements to progress swiftly to merger and reconfiguration."

Mr Andrews said successive evidence pointed to the need for fewer institutions with "greater critical mass" building on their respective strengths rather than "wasting resources competing with neighbours".

A spokesperson for Higher Education Wales said the government's policy on reconfiguration and collaboration is "well understood".

She said: "A number of institutions have implemented, or are discussing, structural change.

"Higher Education institutions are committed to delivering public benefit for Wales - indeed that is at the core of their existence and is the basis of their charitable status."

Widening access and the student experience should be the focus of any regulation...not ministerial aims to reduce the number of universities.Katie Dalton, NUS Wales President

Speaking on BBC Radio Wales, Leighton Andrews said universities would have to fall in line with the assembly government's new strategy if they wanted to charge high fees.

"We want stronger universities in Wales which means pooling resources, academic departments working side by side. We need to see more co-operation and it will mean fewer individual institutions.

Mr Andrews said the merger of Trinity Saint David with Swansea Metropolitan universities and further education colleges in south west Wales was "excellent news".

"They are a model to other institutions across Wales," he added.

On Tuesday, it was announced that Welsh students would be spared a rise in tuition fees, currently set at £3,290.

Some universities in Wales will be allowed to charge up to £9,000 but the assembly government will pay the additional cost for Welsh students attending any UK university.

NUS Wales President Katie Dalton said: "We do not under any circumstances support a tuition fee cap of £9,000, but widening access and the student experience should be the focus of any regulation around this issue, not ministerial aims to reduce the number of universities."

Mr Andrews said if universities wanted to charge higher tuition fees they would have to "guarantee that they will offer access to a wider range of students".